Lawmaker targets companies that profit from Medicaid claims

"This is a government program for some of the poorest of the poor, and no one should be making a profit on it to that extent."

  • Brett Sholtis

(Harrisburg) — For every prescription filled, a company such as Express Scripts, CVS Caremark or OptumRx processes the payment between the pharmacy and the insurer–taking a cut for each transaction.

Republican State Sen. Lisa Baker is sponsoring a proposal to tighten regulations on those companies, known as pharmacy benefit managers, or PBMs.

The legislative effort stems from public hearings that identified “anti-consumer aspects” among pharmacy benefit managers, Baker said in a news release. States including Ohio, Maryland and West Virginia have passed similar laws.

Baker, who represents parts of Luzerne, Susquehanna, Wayne and Wyoming counties, said the proposal also draws on a December report by State Auditor General Eugene DePasquale.

The auditor general’s report states “PBMs have ballooned in the shadows of the prescription drug market, drawing in skyrocketing profits while exerting increasing control over who may access which prescription medications.”

That includes prescriptions for people on Medicaid. In 2017, Medicaid paid $2.86 billion to PBMs, the report states. That’s up from $1.41 billion in 2013.

Limiting what PBMs can bill Medicaid is one of the pillars of the planned legislation, said Pennsylvania Pharmacists’ Association CEO Pat Epple, who is working with Baker to draft the proposal.

“This is a government program for some of the poorest of the poor, and no one should be making a profit on it to that extent,” Epple said.

According to a state senate co-sponsorship memo Baker filed, the legislation would require that Centers for Medicare and Medicaid Services set the price of prescriptions filled through Medicaid.

While Baker’s plan targets Medicaid patients, Epple said she’s working with lawmakers on a similar plan that may lower out-of-pocket costs for all consumers.

In addition to taxpayers and consumers, PBMs are also hurting independent pharmacies, Epple said.

She pointed to a practice known as “spread pricing,” where PBMs reimburse the pharmacy one amount for a medication, charge Medicaid or the insurer a higher price for the same drug, and keep the difference.

According to the auditor general’s report, pharmacists provided documentation showing that PBMs were reimbursing them less money than their wholesale costs–meaning pharmacists lost money each time they filled certain prescriptions.

The legislation also aims to ban PBMs from a practice known as “gag clauses.” Those rules, written into PBM contracts with pharmacies, prohibit pharmacists from notifying people when they might be able to save money by paying cash or using another lower-cost drug.

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